The possibility of selling a minority stake in the giant oil company was first mentioned in a newspaper interview published in January 2016 by then-Deputy Crown Prince Mohammed bin Salman.

The possibility merited little more than a brief mention in a section about economic reforms, diversification and privatisation of state assets. (“Interview with Muhammad bin Salman”, Economist, Jan. 6, 2016).

But this passing reference has spawned an enormous amount of activity from consultants, bankers, stock exchanges, governments and journalists all competing to benefit from the sale of the century.

Saudi Aramco has reportedly prepared a set of corporate accounts to international standards and commissioned an external audit of its oil reserves ready for investors.

The pending sale has triggered a scramble among stock exchanges, including in the United States, the United Kingdom and Hong Kong, to secure a slice of the listing, with each receiving government backing.

Technical preparations for a sale appear to have been largely completed over the last two years but the actual date for any sale has been repeatedly pushed back.

The decision on whether, where and when to list shares lies with the government rather than Aramco, which means that it is in the hands of the newly promoted crown prince.

But there is still no timeline for a decision, let alone an actual listing, and the timetable now appears to have slipped into 2019.

Saudi policymakers have indicated shares will be listed on the domestic stock exchange but there is in fact no firm commitment to list them internationally.

The government has a range of options, from a domestic-only listing, a private sale of shares to a strategic partner, an international listing, or some combination of any of these three.

The longer the decision is delayed, the more likely it is that the sale will not occur, or will be scaled back to a listing on the domestic stock market.

GAS INITIATIVE

It would not be the first time that a major strategic initiative has been substantially modified or quietly dropped.

Saudi Arabia’s gas initiative was launched in 1998, another point when oil prices had slumped and the kingdom’s finances were under pressure.

The gas initiative was part of a broader package of reforms aimed at diversifying the economy, reducing the role of the government and increasing the involvement of the private sector.

The initiative attracted significant interest from international oil firms but meandered for several years without making progress before being quietly shelved around 2002.

The question is whether the partial privatisation of Saudi Aramco will meet the same fate.

Reform efforts in Saudi Arabia tend to be cyclical. Slumping oil prices and revenues push diversification and privatisation onto the political agenda, only for momentum to be lost when prices recover.

Like the gas initiative, the proposal to sell shares in Aramco was made when prices were at cyclical lows, in early 2016.

Now oil prices are recovering, the imperative to privatise is fading.

CONFUSED RATIONALE

From the very beginning, the rationale for selling shares in Aramco has never been clear.

Part-privatising Aramco could lead to improvements in corporate governance. The deputy crown prince mentioned improving transparency and countering possible corruption as reasons in his interview.

Selling shares on the domestic stock exchange could provide a means of giving more ordinary Saudis a sense of ownership and spur the development of a domestic financial services industry.

Selling shares could be the first step towards a much more ambitious diversification of government assets and revenues away from the oil sector.

Or it could simply be a revenue-raising exercise. The plan was mooted when government revenues were at a low point, the budget was running a heavy deficit and financial reserves were falling rapidly.

The sale has always been controversial within Aramco itself, and in parts of Saudi society, with many people quietly questioning whether it makes sense. (“As Saudis prepare to sell shares in oil giant, some have misgivings”, Reuters, Feb. 24, 2017).

Aramco leaders and employees bristle at the suggestion the company has been badly run, arguing that it is in fact one of the best-managed institutions in the kingdom.

Selling shares on the domestic stock market or to foreigners could reduce the benefits of oil wealth for lower-income Saudis if it caused the diversion of funds to already-wealthy Saudi and foreign owners.

Critics fear the decision to sell shares when oil prices are near the bottom of the cycle would undervalue the company.

Finally, the sale is arguably too small to achieve meaningful diversification or raise significant sums of money for the government.

Selling 5 percent of the company is not enough to achieve meaningful reduction in the government’s dependence on oil.

Even if the sale valued the company at $2 trillion, as the crown prince has said it is worth, the sale of 5 percent for $100 billion would not raise enough money to make much of a difference.

The kingdom still has foreign reserves worth almost $500 billion and an extra $100 billion would not be nearly enough to fund the ambitious social and economic transformation projects outlined by the government.

RISING OIL REVENUES

As oil prices have risen, the government's budget deficit has narrowed and the kingdom's foreign reserves have stabilised. (tmsnrt.rs/2tvQ0GW)

The kingdom has sought other sources of financing, including expropriating assets as part of the anti-corruption campaign, which the government hopes will raise $100 billion.

As oil revenues grow again, the benefits from the sale will start to seem less compared with the inevitable problems and costs, making an eventual sale less likely.

That said, the prospect of a sale has enabled the kingdom to drum up significant interest from bankers and professional services firms.

And it has also allowed it to play off governments including the United States and Britain.

With so many keen suitors, Saudi is likely to keep its options open for as long as possible, and is unlikely to shut the door on an international sale completely.

Still, its leaders appear to be in no hurry to commit to a timetable or venue. In the end, they might settle for a simpler domestic listing, with or without the sale of a small strategic stake to an international investor.

Ultimately, the decision will be taken by Saudi Arabia’s de facto ruler, Mohammed bin Salman, and on this issue, he appears to be in no rush.